Concerns on Syrian Conflict Weigh On Investors’ Minds

Markets

For the week of Monday, August 26, 2013 through Friday, August 30, 2013:

• Standard & Poor’s 500 Index: -1.79%
• Dow Jones Industrial Average: -1.29%
• NASDAQ Composite: -1.83%

On Monday, stocks fell, giving up the day’s gains in the final hour after the State Department delivered its clearest indication yet that the White House is considering military action against Syria. The markets’ concern over the Syrian conflict continued on Tuesday, with stocks falling to two-month lows. Low volumes exacerbated the effect of the selling. Midweek, the markets increased, recovering some of Tuesday’s losses, because there was a strong showing in the energy sector. Encouraging economic reports helped stocks start higher on Thursday. By the end of the week, however, the markets closed lower as investors held off making purchases ahead of the holiday weekend. Friday’s trading was volatile, as stocks teetered between breakeven and losses.

Economic Data

• Durable Goods Orders:
  • New orders for durable manufactured goods fell 7.3% in July, reversing June’s 3.9% increase.
    • Aircraft orders fell after a strong June, hurting the headline number.
    • Excluding transportation, new orders fell 0.6%.
  • Total shipments declined 0.3%, while inventories grew 0.4%.
  • The report was negative, as core capital orders declined 3.3%, and shipments fell 1.5%.
• Chain Store Sales:
  • The chain store sales index increased 0.2% for the week.
  • Year-over-year growth was 1.9%, compared to the 2.3% year to date average.
• Case-Shiller Home Price Index:
  • Home price appreciation accelerated on a year-ago basis in June relative to May.
    • The 10-city composite rose 11.9% year-over-year, building on the 11.8% increase last month.
    • The 20-city composite also increased 12.1% during the month, just below last month’s 12.2% increase.
  • Not seasonally adjusted, the 10- and 20-city composites were both up 2.2% month-to-month.
    • Seasonally adjusted, the 10- and 20-city composites were up 1.1% and 0.9%, respectively.
  • The national index increased 7.1% for the second quarter, putting it up 10.1% over the past four quarters.
• Conference Board Consumer Confidence:
  • The Conference Board’s Consumer Confidence Index rose to 81.5 from July’s revised 81.
    • The index remained above 80 for three consecutive months for the first time since the beginning of the recession.
  • Expectations increased from 86 to 88.7; however, the present situatio fell from 73.6 to 70.7.
• MBA Mortgage Applications Survey:
  • Mortgage activity fell for the third straight week, falling 2.5%.
    • Refinance activity slid 5.4% near the lowest level since 2008.
    • Purchase applications increased 2.4%.
• Jobless Claims:
  • Initial claims fell 6,000 to 331,000, following last week’s 15,000 decline.
  • The four-week moving average increased for the first time since early July, rising from 330,500 to 331,250.
  • Continuing claims fell 14,000 to 2.989 million.
• Gross Domestic Product (GDP):
  • GDP grew 2.5% in the second estimate.
    • This was a 1.7% increase from the first estimate, and up from 1.1% in the first quarter.
  • Acceleration increased, as a result of growth in nonresidential investment, such as, structures, exports and reduced imports.
  • The government impact fell and was offset partially by slower consumer spending.
  • Inflation was slower for the quarter.
  • Profits rose 3.9% compared to a 1.3% decline in the first quarter.

Earnings:

• Tiffany & Co. (NYSE: TIF)
  • Tiffany earned $106.8 million, or $0.83 a share, compared to $91.8 million, or $0.72 a share, a year ago.
    • Revenue rose 4% to $925.9 million, compared to $886.6 million.
    • Analysts expected $0.74 a share and revenue of $941.5 million.
  • Asia-Pacific sales increased 20%, European sales rose 11%, and U.S. sales were up 2%.
    • Japan’s sales fell 14%, on a weaker yen.
    • Same store sales rose 5% on growth in most regions.
• TiVo Inc. (NASDAQ: TIVO)
  • After a patent dispute led Google and Cisco to pay TiVo $490 million to settle the case, TiVo reported a large profit.
    • Excluding the settlement and other one-time items, TiVo reported a loss, but said it believes it has now achieved sustained profitability.
  • TiVo reported earnings of $268.9 million, or $1.96 a share.
    • TiVo lost $13.1 million, excluding the settlement payments and other items.
  • Revenue rose 53%, from 65.3 million to $100.1 million.
    • Analysts expected a $0.10 a share loss on $91.1 million in revenue.
  • TiVo lost $27.7 million, or $0.23 a share, last year.
• Guess Inc. (NYSE: GES)
  • Guess’ results beat expectations, earning $0.52 a share, excluding one-time items.
    • Revenue increased 0.6% to $639 million.
    • Analysts expected $0.36 a share and revenue of $622.9 million.
  • Net income declined 7% to $39.8 million, or $0.47 a share, compared to $42.9 million, or $0.49 a share, year-over-year.
    • Same store sales fell 2% in the quarter.
• Brown-Forman Corporation (NYSE: BF-B)
  • Brown-Forman reported net sales growth of 2% to $896 million, on an underlying basis the increase is 5%.
  • Operating income fell 2% to $217 million, a 4% increase on an underlying basis.
  • Earnings per share decreased 3% to $0.66.
    • The Jack Daniel’s trademark grew underlying sales 7%.
    • Super- and ultra-premium whiskey brands grew underlying sales 20%, including 25% growth from Woodford Reserve.
• Williams-Sonoma Inc. (NYSE: WSM)
  • Williams-Sonoma’s profit increased nearly 13%, causing them to raise the full-year guidance.
  • Williams-Sonoma reported earnings of $48.9 million, or $0.49 a share, compared to $43.4 million, or $0.43 a share last year.
    • Revenue rose 12% to $982 million from $874 million.
    • Analysts expected $0.47 a share and revenue of $938.9 million.
  • Same store sales increased 8.4%, in addition to 7.4% last year.
    • Revenue from its direct-to-consumer business, which includes catalog and online sales, increased 15% to $477.7 million.
• Campbell Soup Company (NYSE: CPB)
  • Campbell Soup reported acquisitions and strengthening U.S. sales of condensed soups and broth led to its 9% rise in adjusted profit.
  • Campbell’s reported earnings $142 million, or $0.45 a share, compared to $130 million, or $0.41 a share, year-over-year.
  • Analysts expected $0.42 a share on revenue of $1.84 billion.
  • Sales increased 13% to $1.72 billion.
    • Soup sales rose 4%.
    • Sauces sales jumped 12%.
    • Beverage sales decreased 4%.
    • Global Baking and Snacking increased 3%.
    • Sales for International Simple Meals and Beverages decreased 7%.

Interest Rates

• While still close to 2013 highs, rates remained flat this week.
  • The two-year Treasury rate rose three basis points higher to 0.41%, a two-year high.
  • The five-year Treasury rate increased four basis points to 1.66%.
  • The 10-year Treasury rate remained at 2.82%.
  • The 30-year Treasury yield fell two basis points to 3.77%.

Disclosures

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